Meanwhile there has been concerns in the print industry. Mainly due to the lack of clarity. A prominent print CEO from Chennai spoke to PrintWeek India and said, "Print is going to become costlier. Traders and small print firms are totally clueless. At the moment, only the stock of accountants and consultants is on the rise." 

 

The CEO mentioned, "At the moment, 90% of the offset printers plus the digital print segment in India are small scale units who avail Excise Duty exemption available to small scale industry having annual turnover of Rs 150 lakhs. Further, the printers are presently exempted from payment of Service Tax and sales made by them suffer a State VAT of 4% on average. Imposition of GST at the rate of 12-18% on printed products would be disruptive to the business of the small scale units operating in the country; especially since the margins are, as it is, extremely poor." 

 

Keeping all this in mind, the All India Federation of Master Printers (AIFMP) under the leadership of Anand Limaye has made a representation to Arun Jaitely, chairman of Goods and Services Tax Council and Minister of Finance about four themes.

 

These are: clarification on taxability of printing contracts; reduction in GST rate for printing services; reduction in GST rate for tariff item 4911; and increase in threshold limit for composition levy from Rs 75 lakhs to Rs 1 crore.

 

The AIFMP is an apex body of two lakh print firms in this country, which employ around fifteen lakh people directly and ten lakh people indirectly. Established in the year 1953, AIFMP draws its strength from seventy-two regional associations spread all over the country, which are affiliated to it.

 

Anand Limaye who is the honorary general secretary of the AIFMP said, "Under the existing indirect tax regime, there has been confusion regarding treatment of the activity of printing and supply of printed materials regarding whether the same amounts to sale of goods or works contract."

 

Limaye added, "Since GST is aimed at eradicating anomalies present in the existing indirect tax law and providing clear and uniform tax treatment, it is requested that clarity should be provided as to the taxability of printing contracts under the GST regime." 

 

Speaking about print contracts, he pointed out, "As per the ordinary practice, two kinds of printing contracts are prevalent in the printing industry, namely contracts wherein the customer provides only content to the printer, and contracts wherein the customer provides content as well as paper to the printer."

 

In case of first type of contracts, the printer has to supply the printed material such as a book or a journal to the customer using the content provided by the customer. Here, the predominant element is that of supply of the said printed material. In light of the same, clarity is sought that such contracts may be treated as supply of goods for the purpose of levy of GST. The second kind of printing contracts are the one where the customer provides paper to the printer and the primary aim of the customer is to engage the printing services of the printer. Here, supply of other materials, such as ink, chemical, etc. is ancillary to the supply of printing service and is merely a means to provide the principal supply of printing.

 

In this regard, Limaye mentioned, clarity is sought that such contracts where the customer provides paper to the printer may be treated as supply of printing services for the purposes of GST law.

 

The AIFMP is seeking reduction in the GST rate for services by way of job-work in relation to printing of products (other than printing of books, periodicals or journals) from 18% to 5%.

 

Limaye along with Uday Dhote and Vinod Jain who have worked on the representation felt that "the current margins of the printing industry are highly competitive and it is practically impossible to raise output prices to recover the higher tax incidence mentioned above. The current margins of the industry range only around 8%-10% which is not sufficient to absorb the increased tax incidence."

 

The trio added, "Moreover, there are many services required by way of job work in relation to printing of a product other than ‘only printing’, namely, lamination, foiling, stamping, binding, varnishing, pasting, coating, die-cutting, gilding, creasing, indexing, gumming, etc. In this regard, clarity is sought that all such services may be treated as ‘services by way of job work in relation to printing’ for the purpose of this entry.

 

The AIFMP representation has mentioned that the items covered under tariff heading 4911 suffer nil rate of Excise Duty and are exempt from the levy of Service Tax. Further, the effective rate of VAT in most States on the sale of such items averages at 4%. The representation added, "Also, under the current regime, items covered under tariff heading 4911 are taxed similar to items covered under tariff heading 4901 (brochures, leaflets and similar printed matter, whether or not in single sheets). However, under the GST regime, the former has been placed in the tax slab of 12% while the latter has been placed in the 5% slab."

 

Limaye felt, since the range of profit margin of the printing industry is low and the printers undertaking printing of the items covered under the tariff heading 4911 would not be able to absorb the increased tax incidence. 

 

Under such circumstances, AIFMP is seeking "a clear and uniform tax structure ... and request to reduce the GST rate for items covered under tariff heading 4911 from 12% to 5%."

 

Copies of the letter have been despatched to Santosh Kumar Gangwar, Minister of State for Finance; Hashmukh Adhia, Revenue Secretary, Ministry of Finance; and Vanaja N Sarna; Chairperson; Central Board of Excise, Customs & Service Tax, Department of Revenue, Ministry of Finance.